Korea Industry February 2018

Korea: Industrial production drops to a five-year low in February

March 30, 2018

Industrial production in the mining, manufacturing, and gas and electricity sectors dropped 6.4% in February compared to the same month last year, contrasting January’s revised 4.3% increase (previously reported: +4.6% year-on-year). February’s reading marked the largest year-on-year decline in five years and came in well below the 3.1% drop that market analysts had expected. The Lunar New Year holiday, which took place in February this year—last year it was in January—resulted in fewer working days and weighed on industrial production. Annual average growth in industrial production decelerated to 1.0% in February (January: 2.2%).

Output in the manufacturing sector swung to a sharp 7.2% drop in February compared to the same month last year, dragging on the month’s headline figure. The average factory capacity utilization rate, meanwhile, edged up to 72.3% in February, from January’s revised 70.3% (previously reported: 70.4%).

FocusEconomics Consensus Forecast panelists expect industrial production to expand 1.8% in 2018, which is down 0.3 percentage points from last month’s forecast. For 2019, panelists expect industrial output to increase 2.5%.

Author:Javier Colato, Economist

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The IHS Markit manufacturing Purchasing Managers’ Index (PMI) increased to 49.0 in August from 47.3 in July, but remained below the 50-threshold that separates expansion from contraction in the manufacturing sector.
Output, employment and new orders all declined in August.

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